We sought to answer this riddle with our usual customer-centric approach. We focused on the four personas that represent the majority of the mass market that has been the target for financial inclusion in India: a farmer, a daily wage labourer, a clerk who works in the city, and a security guard.

Shankar Singh is a daily wage earner. Most of his earning of about INR 8,000 (USD 117) per month is committed for household essentials and debt repayment. Since he is risk averse, and wants to avoid the hassles caused by distance, low literacy levels etc., he saves in a box at home. When the money runs out, Shankar is susceptible to falling into debt. Jai Prakash is a security guard who earns a salary of INR 8,000 (USD 117) per month and by the third week, when the money runs out, he turns to his employer for an advance on his salary and/or to his friends for interest free soft loans. He prefers the ease of such informal borrowing avenues and discounts the unreliable nature (in case the employer or friend is unable lend him money) or costs (e.g. interest paid) of these sources of cash. Sundar Devi is a dairy farmer and her daily income amounts to about INR 20,000 (USD 294) per month. In many months, this is enough to manage her household expenses and even put away some savings. Vijay Thakur, a salaried clerk, earns a little under INR 20,000 (USD 294) a month and meticulously saves, invests in insurance and takes loans for specific goals like child’s education, weddings etc. In a financially stressed situation, Sundar Devi and Vijay Thakur compromise on savings and investments, and may even fail to honour monthly loan repayment instalments. Such financial turbulence can be due to sudden spikes in unforeseen expenditure such as sudden illness, an investment in a business opportunity, a family function, or a life event, etc. (Read more about their lives here).

The two of the key determinants for all four personas’ financial decisions are the quantum and frequency of income – representing ‘how much’ and ‘how often’ for the mass market. These two together define the ability of a family to meet regular household expenses, planned future expense and/or any eventuality. These two factors also play a significant role in paving the way for four discreet financial phases through which a household oscillates.
A household’s disposable income influences the financial behaviour, which changes as the household moves through these four phases:

The comfort zone when money inflow is enough to meet household expenses;

The fluid zone when the household money has almost run out;

The stress zone when small loans are needed to smoothen consumption; and

The blast zone when credit is not enough, or simply unavailable, and liquidating household (or in the very extreme cases, business) assets is the only way to sustain basic household financial needs.

The mass-market keeps moving through these four zones and a closer look will provide a deeper understanding of the financial choices adopted by them to navigate through these phases.

The household in these zones might have a PMJDY account in a branch close to home, but still lack financial robustness and income security to use these accounts. The challenge, as we see here, is developing a versatile set of tools to service the mass market whilst accommodating the vari0us and changing money management strategies of different households. For instance, how can we offer Shankar a formal savings product that satisfies his liquidity requirements (accessibility), small loans for Jai Prakash without high interest rates, and better investment options for Sundar Devi and Vijay Thakur so that money in the boxes at home can be unlocked, nurtured and grown?

Expecting financial inclusion programmes to succeed by relying on easy credit, a bank account, or enabling hassle free payments oversimplifies the complexity of the challenge. None of these laudable initiatives has attempted to create the behavioural changes that are essential for financial inclusion. As a result, they have only seen limited success – either for specific customer segments or for a specific geography (for instance, there are financial services specifically targeted for migrant labourers, DBT beneficiaries and bill payers). The mass-market prefers tools that provide them with a tangible, trustworthy, and easily understandable approach to manage their money. They want clear visibility into their money, and (ideally) how it is working for them. So, for example, they see and know the whereabouts of creditor/debtor and friends/relatives. They are looking for tools that help them quickly replenish their liquidity when the need arises, ideally without trapping them in debt spirals.

While interacting with Shankar, Sundar Devi, Vijay, and Jai Prakash we kept asking ourselves if there is a product/service that can work for them both in the comfort zone and the stress zone. We did not find any. In fact, we found that existing financial services designs fall short of incorporating geographical, cultural, and literacy heterogeneity, critical to enhance usability. For example, leading mobile wallets rely on aesthetic abstract icon designs supported by text to serve its customers. However, when unassisted, such abstractions mean very little to an illiterate or a neo-literate person like Shankar and Jai Prakash. (Please see our recent work that identifies new dimensions to mobile wallet designs for illiterate and innumerate people).

We are at a juncture that calls for introspection on current design concepts to create a new breed of financial tools (not products) for the mass market. With myriad complex cognitive factors defining financial behaviour, creating products for specific customer segments or use cases will always have limited reach. Given the agenda of financial inclusion, service providers should create a suite of flexible and intuitive money management tools that cater to multiple use-cases, and meet the requirements in all the four zones for the multiple segments of mass market.